According to the filing, WhaleCo Inc, which operates in the U.S. as Temu, alleges rival Shein misused intellectual property legislation to stop merchants and suppliers working with Temu
PDD Holdings’ international facing discount e-commerce platform, Temu, filed a lawsuit in a U.S. District of Columbia court on Wednesday alleging competitor Shein employed “Mafia-style intimidation” to coerce suppliers that also worked with Temu.
As per the filing, Boston-based firm WhaleCo Inc, which operates in the U.S. as Temu, alleges China-founded, Singapore-based rival Shein misused intellectual property legislation to stop merchants and suppliers working with Temu.
It also claimed Shein “falsely imprisoned” vendors who dealt with Temu by holding up merchant representatives in Shein’s offices for several hours, seizing their electronic devices and threatening them with penalties for doing business with Temu.
We believe this lawsuit is without merit and we will strongly defend ourselves, Shein commented on the lawsuit.
Both companies, which have roots in China, have seen their businesses soar in the U.S. market in recent years as inflation and cost-of-living pressures have helped attract consumers to low-cost e-commerce offerings, like Shein’s $5 T-shirts and Temu’s $3 earphones.
The bulk of suppliers for both firms are in China and a Temu spokesperson confirmed the alleged infractions involved Chinese vendors.
We sued Shein because recently their actions have escalated. They started to unlawfully detain merchants, forcibly asking for their phones, stealing our merchant accounts and passwords, stealing our business secrets, and simultaneously compelling merchants to leave our platform, according to the spokesperson.
The lawsuit also alleges that Shein poached Temu’s key marketing and advertising personnel. It did not specify where they were based.
This is not the first time the fierce rivals have filed legal suits in U.S. courts. Both firms withdrew actions filed against one another in October without giving a reason.